Johnson Controls International plc

Johnson Controls International plc operates as a global leader in smart, healthy and sustainable buildings, serving a wide range of customers around the globe. The company's products and solutions advance the safety, comfort and intelligence of spaces to serve people, places and the planet. The company is a global leader in engineering, manufacturing, commissioning and retrofitting building products and systems, including commercial HVAC equipment, industrial refrigeration systems, controls, security systems, fire-detection systems and fire-suppression solutions. The company further serves customers by providing technical services, including maintenance, management, repair, retrofit and replacement of equipment and energy-management consulting. The company's OpenBlue digital software platform enables enterprises to better manage their physical spaces by combining building products and services with cutting-edge technology and digital capabilities to enable data-driven smart building services and solutions.

The company conducts its operations through a significant number of individual contracts that are either negotiated or awarded on a competitive basis. Key factors in the award of contracts include system and service performance, quality, price, design, reputation, technology, application engineering capability, availability of financing and construction or project management expertise. Competitors for HVAC equipment, security, fire detection, fire suppression and controls in the residential and non-residential marketplace include many local, regional, national and international providers. Larger competitors include Honeywell International, Inc.; Siemens Smart Infrastructure, an operating group of Siemens AG; Schneider Electric SA; Carrier Global Corporation; Trane Technologies plc; Vertiv Holdings Co., API Group and Daikin Industries, Ltd. The company also competes in a highly fragmented building services market and faces competition from a diverse range of established companies, start-ups and other emerging entrants in the areas of digital services, software as a service and the Internet of Things. The loss of any individual contract or customer would not have a material adverse effect on the company.

The company generates revenue through the sale and installation of its commercial HVAC equipment and systems, control systems, security systems, fire-detection and fire suppression systems, equipment and services primarily through its extensive direct channel, consisting of a global network of sales and service offices. Significant sales are also generated through global third-party channels, such as distributors of air-conditioning, controls, security and fire-detection and suppression products. The company's large base of current customers leads to significant repeat business for the maintenance, retrofit and replacement markets. The company is also able to leverage its installed base to generate sales for its service business. In fiscal 2025, products and systems accounted for approximately 68% of sales from continuing operations and services accounted for 32% of sales from continuing operations.

The company's products, systems, services and solutions advance the safety, comfort and intelligence of spaces. Trusted building brands include YORK, Metasys, Ansul, Frick, FM:Systems, PENN, Sabroe, Silent-Aire, Simplex and Grinnell. The company has developed software platforms, including on-premises platforms and cloud-based software services, and integrated its products and services with digital capabilities to provide data-driven solutions. The company's OpenBlue platform combines building expertise with cutting-edge technology, including artificial intelligence and machine learning-powered service solutions such as remote diagnostics, predictive maintenance, workplace management, compliance monitoring and advanced risk assessments. These services are generally designed to generate recurring revenue for the company as it supports its customers in achieving their desired outcomes.

The company conducts its business through three operating segments: Americas, EMEA and APAC. The Americas segment designs, manufactures, sells, installs and services HVAC, controls, building management, refrigeration, integrated electronic security systems, integrated fire detection and suppression systems, and digital solutions for commercial, industrial, data center, institutional and governmental customers in the Americas. The EMEA segment designs, manufactures, sells, installs and services HVAC, controls, building management, refrigeration, integrated electronic security systems, integrated fire detection and suppression systems, and digital solutions for commercial, residential security, industrial, data center, institutional, governmental, and marine customers in Europe, the Middle East and Africa. The APAC segment designs, manufactures, sells, installs, and services HVAC, controls, building management, refrigeration, integrated electronic security systems, integrated fire detection and suppression systems, and digital solutions for commercial, industrial, data center, institutional, and governmental customers in the Asian and Pacific marketplaces.

On July 31, 2025, the company completed the divestiture of its Residential and Light Commercial HVAC business to Robert Bosch GmbH for net cash proceeds of approximately $5.6 billion ¹ after tax and transaction-related expenses. The R&LC HVAC business included the company's North America Ducted business and Johnson Controls-Hitachi Air Conditioning Holding (UK) Ltd., the company's global residential joint venture with Hitachi Global Life Solutions, Inc. In June 2025, the company's Board of Directors approved a $9.0 billion ² increase to the company's share repurchase authorization, adding to the $1.1 billion ³ remaining as of March 31, 2025 under the prior share repurchase authorization approved in 2021. On August 7, 2025, the company entered into accelerated share repurchase transactions to repurchase an aggregate of $5.0 billion ⁴ of the company's ordinary shares. Under the terms of the ASR Transactions, on August 11, 2025, the company paid the Repurchase Price to the Counterparties in exchange for an initial delivery of approximately 43,140,640 ⁵ Shares. The company declared dividends of $1.51 ⁶ per share in fiscal 2025. During the fourth quarter of fiscal 2024, the company committed to a multi-year restructuring plan to address stranded costs and further right-size global operations as a result of previously announced portfolio simplification actions. It is expected that one-time restructuring costs of approximately $400 million ⁷ will be incurred over the course of fiscal 2025, 2026 and 2027, resulting in expected annual cost savings of approximately $500 million ⁸ upon full completion of the plan.

For the fiscal year ended September 30, 2025, net sales from continuing operations were $23.596 billion ⁹, compared to $22.952 billion ¹⁰ in fiscal 2024, an increase of 3% ¹¹. The increase in net sales was due to higher organic sales of $1,430 million ¹², partially offset by the net impact of acquisitions and divestitures of $786 million ¹³. Excluding the impact of foreign currency translation and business acquisitions and divestitures, consolidated net sales increased 6% ¹⁴ over the prior year. Gross profit was $8.592 billion ¹⁵ compared to $8.077 billion ¹⁶ in the prior year, with gross margin improving to 36.4% ¹⁷ from 35.2% ¹⁸. Income from continuing operations was $1.724 billion ¹⁹ compared to $1.411 billion ²⁰ in fiscal 2024. Net income attributable to Johnson Controls was $3.291 billion ²¹ compared to $1.705 billion ²² in the prior year. Diluted earnings per share from continuing operations was $2.63 ²³ compared to $2.08 ²⁴ in fiscal 2024. Cash provided by operating activities from continuing operations was $2.554 billion ²⁵ compared to $1.568 billion ²⁶ in the prior year.

The company has committed to a multi-year restructuring plan to address stranded costs and further right-size global operations as a result of previously announced portfolio simplification actions. It is expected that one-time restructuring costs, including severance and other employee termination benefits, contract termination costs, and certain other related cash and non-cash charges, of approximately $400 million ²⁷ will be incurred over the course of fiscal 2025, 2026 and 2027, resulting in expected annual cost savings of approximately $500 million ²⁸ upon full completion of the plan. Restructuring and transformation costs in fiscal 2025 have been material, resulting in savings in 2025 and additional expected savings in fiscal 2026 and 2027. Restructuring costs will be incurred across all segments and Corporate functions.

The company has four strategic priorities: Capitalize on Key Growth Vectors, Bringing Value Across the Building Lifecycle, Accelerate in High Growth Verticals, and Sustain a High-Performance, Customer-Centric Culture. Data centers, decarbonization, sustainable buildings, smart buildings, energy efficiency and mission-critical environments represent key growth opportunities for the company. The company seeks to leverage its existing portfolio breadth and investments in product development, combined with the expansion of its digital products and capabilities powered by OpenBlue, to offer differentiated solutions and innovative deal structures. The company intends to expand its capabilities by investing in products and technologies, as well as expanding its partnerships, to power innovation. The company is focused on driving growth and profit by developing and implementing solutions designed to address its customers' vertical specific needs in their core missions, enabled by the company's installed base, domain expertise and global coverage. The company further intends to expand its presence in high growth verticals within the markets it serves, including data centers, hospitals, university campuses, advanced manufacturing, class A offices, and airports.

The company is augmenting its strategic priorities with disciplined execution, productivity enhancements and sustainable cost management to create a path to realize expanded margins and enhanced profitability. The company has committed to a multi-year restructuring plan to address stranded costs and further right-size global operations as a result of previously announced portfolio simplification actions, with expected annual cost savings of approximately $500 million ²⁹ upon full completion of the plan.

The company has committed to a multi-year restructuring plan to address stranded costs and further right-size its global operations as a result of previously announced portfolio optimization transactions. During fiscal year 2025, the company realigned its organizational structure into three regional reporting segments as part of ongoing initiatives to drive simplification, accelerate growth, and better reflect its organizational and operational structure. The company is taking actions to mitigate the actual and anticipated impact of tariffs and other trade restrictions, including strengthening the company's in region, for region manufacturing strategy, pivoting to local sourcing in its supply chain, accelerating pricing actions and asserting contractual rights through change orders. The company has historically taken a variety of actions to mitigate trade restrictions, supply chain disruptions and inflation, including through expanding and redistributing its supplier network, supplier financing, accelerated purchasing and productivity improvements.

The company has committed to invest a substantial portion of its new product research and development in developing products and services supporting energy efficiency, decarbonization and mission-critical environments. Research and development expenditures for the years ended September 30, 2025, 2024 and 2023 were $273 million ³⁰, $267 million ³¹ and $251 million ³², respectively. Capital expenditures from continuing operations were $434 million ³³ in fiscal 2025 compared to $494 million ³⁴ in fiscal 2024. In June 2025, the company's Board of Directors approved a $9.0 billion ³⁵ increase to the company's share repurchase authorization, adding to the $1.1 billion ³⁶ remaining as of March 31, 2025 under the prior share repurchase authorization approved in 2021. As of September 30, 2025, approximately $4.8 billion ³⁷ remains available under the company's share repurchase authorization. The company declared dividends of $1.51 ³⁸ per share in fiscal 2025 and intends to continue paying quarterly dividends in fiscal 2026. The company paid cash dividends of $976 million ³⁹ in fiscal 2025.

The company continues to observe trends demonstrating increased interest and demand for its products and services that enable smart, safe, efficient and sustainable buildings, which are driven in part by government tax incentives, building performance standards and other regulations designed to limit emissions and combat climate change. In particular, legislative and regulatory initiatives such as the EU Energy Efficiency Directive, EU Heat Transition, U.S. Inflation Reduction Act and EU Energy Performance of Buildings Directive include provisions designed to fund and encourage investment in decarbonization and digital technologies for buildings. This demand is supplemented by an increase in commitments in both the public and private sectors to reduce emissions and/or achieve net zero emissions. The increased maturity and adoption of AI and high-performance computing is currently impacting the microchip and data center industry and driving technology innovation, which has led to increased demand for hyperscale and data center cooling solutions that deliver heat management and energy efficiency.

The United States has announced tariffs and reciprocal tariffs on a wide range of products manufactured or produced worldwide, including Canada, China, the European Union, Japan and Mexico, among others. Several countries have similarly announced reciprocal or other tariffs impacting products manufactured or produced in the United States. Although the company has been largely able to mitigate the impact of tariffs that have been enacted to date, if additional tariffs and reciprocal tariffs are implemented, such actions could negatively impact the company's revenue growth and margins in future periods through decreased sales and increased cost of goods sold. The company has experienced, and could again experience, increased material cost inflation and component shortages, as well as disruptions and delays in its supply chain, as a result of global macroeconomic trends including the imposition of tariffs and other restrictive trade measures, as well as geopolitical and economic tensions. Certain of the company's customers, including governmental and institutional customers, have exhibited increased uncertainty regarding future spending decisions due to various political and economic factors, including budget reductions, reprioritization of spending, interest rate fluctuation and economic uncertainty.

The company's results of operations were impacted by the softening of economic conditions in China, negatively impacting the performance of the APAC segment. The continuation of economic weakness in China or in other regions could adversely impact the company's financial performance in such regions, as well as its consolidated financial performance. As a result of the company's global presence, a significant portion of its revenues and expenses is denominated in currencies other than the U.S. dollar, subjecting the company to non-U.S. currency risks and non-U.S. exchange exposure. Exchange rates can be volatile and a substantial weakening of foreign currencies against the U.S. dollar could reduce the company's profit margin in various locations outside of the U.S. and adversely impact the comparability of results from period to period.

The company's future growth is dependent upon its ability to develop or acquire new products, services and technologies that achieve market acceptance with acceptable margins, and failure to do so could significantly reduce revenues. The company faces risks from cybersecurity incidents impacting its IT systems and digital products, which could result in the loss of critical and confidential information and materially affect results; during September 2023, the company experienced a cybersecurity event where certain data was impacted. The company is subject to potential liability for environmental contamination, including from PFAS contained in certain legacy firefighting foam products, and has been named in class action and other lawsuits relating to the use of fire-fighting foam products. The company and certain subsidiaries are named as defendants in asbestos-related product litigation, with estimated costs projected through 2068 ⁴⁰. Changes in U.S. or foreign trade policies, including tariffs, could disrupt supply chains and increase costs; the United States has announced tariffs on a wide range of products from Canada, China, the European Union, Japan and Mexico, among others, and the company expects such actions could negatively impact revenue growth and margins. The company may not realize the benefits of its ongoing efforts to simplify its portfolio, including the divestiture of its R&LC HVAC business, which could be dilutive to earnings.

Management's message emphasizes the company's strategic focus on buildings and its commitment to helping customers win and creating greater value for all stakeholders. The company's core strategy remains advancing smart, healthy and sustainable buildings to power its customers' missions, enabled by a simpler, more focused company focused on driving growth, profit, and cash flow. The company has four strategic priorities: Capitalize on Key Growth Vectors, Bringing Value Across the Building Lifecycle, Accelerate in High Growth Verticals, and Sustain a High-Performance, Customer-Centric Culture. The company is leveraging its technology leadership, product portfolio, global presence, substantial installed base, sizable field position and strong channels to monetize the lifecycle opportunities of systems, service, retrofit and replacement. The company is augmenting its strategic priorities with disciplined execution, productivity enhancements and sustainable cost management to create a path to realize expanded margins and enhanced profitability. The company has committed to a multi-year restructuring plan to address stranded costs and further right-size global operations as a result of previously announced portfolio simplification actions, with expected annual cost savings of approximately $500 million ⁴¹ upon full completion of the plan.